How to Deal with Medical Debt Caused by Overwhelming Hospital Bills

Last Updated: July 19, 2017

Hospital bills are the number one reason for filing for Chapter 7 bankruptcy in the United States. Even if you are not forced to the brink of bankruptcy, you don't have to end up plowed under by excessive medical debt. There are many options and resources available to get help with your hospital bills. Some of these methods will work even if the hospital bill is already in collections.

Note: Keep in mind that medical bills wind up in collections very quickly, and collection agencies handling these accounts usually have good records. Debt validation does not usually work with a medical collections firm. Do everything you can to keep accounts out of collections.

Contact Hospital Financial Assistance

Most hospitals have a financial assistance expert on staff. Sometimes this expert can set you up with a payment plan right at discharge, and so long as you follow the plan the hospital will basically leave you alone. The expert can also offer help with insurance. He can, for example, often set you up with a county or state insurance plan that you've never even heard of. He can sometimes get those plans to retroactively pay the bill, too.

This person is also the gatekeeper for the hospital charity application. If a charity application gets approved then a portion of your bills, maybe even all of your bills, will wind up forgiven.

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These programs are only available to those who get injured because of someone else who is committing a crime. Note that you can't have been committing a crime yourself at the time! These programs will pay your hospital bills, but you have to file the claim correctly and in the proper fashion. Ask the police or the hospital for help with contacting the Victim of Crimes department. If your bill is in collections already the agent may be able to get this information to you as well, provided the statute of limitations on filing has not already expired.

If your trip to the hospital is the result of a workman's comp case, you should be prepared for events to slow to a crawl. It takes a lot of time to resolve these cases and a lot of conversations, so make sure you keep all of your case information handy at all times. Many of these cases do wind up at the collection agency before they end up getting paid. Since the collection agency knows the workman's comp insurance provider has bigger pockets than you do, they will typically want to push it with the insurance provider instead. You just need to make sure the bill in question relates, directly, to the workman's comp injury. Be sure you give the agency all of the information they ask for.

There's a hierarchy of responsibility when it comes to automobile accidents, as multiple insurance companies and individuals are typically involved. A lot of who has to pay what depends on the circumstances of the accident. Make sure the hospital or collection agency has all of the information they need to resolve the problem. That information includes the contact information and car insurance information for everybody involved in the accident. They will also need your medical insurance information. If any attorneys are involved, the hospital or collection agency will need that information too.

If you can't turn anywhere else, there are several charities that help out with medical bills. Try the Access Project, the CancerCare Co-Payment Assistance Foundation, Children's Health Fund, Catholic Charities and Free Medical Camps, just to name a few. There are also charities that target prescriptions, diapers, and other needful things.

Double Check Your Insurance Company

Sometimes, insurance refuses to pay the bills for reasons that are easily fixed. The most common fixable problem is a co-ordination of benefits, where the insurance company believes you might have a second health insurance company. If you do, they need that information so the two insurance companies can decide who has to pay what. Usually a simple fax that outlines your insurance situation will solve the problem. Sometimes it can even be done through an automated system phone call. Some insurance companies ask for co-ordination of benefits information every year as a matter of policy. Make sure you read everything that comes from your medical insurance company to avoid this problem.

Going bankrupt over hospital bills should always be a last resort, after every other option and resource has been exhausted. If you're sick right now, know that the financial troubles can eventually be solved one way or another. Concentrate on healing for now, and worry about the price tag later.


Medical Bills On Credit Report - How To Remove Medical Bills From Credit Report

Medical bills on credit

Texas stature of limitations is 4 yrs

Medical bills on credit

Wow, thank you so so much for this video. I called wanting to pay they told me I owed more, asked for debt validation just to make sure. I owed less due to some credits on other accounts, then asked for a settlement and paid even LESS! Thank you !

Medical bills on credit

How do they guarantee that they will stop reporting it if you settle and pay? You just take their work for it?

Medical bills on credit

I like your enthusiasm. Has anybody tried the advice he gave? Did it work?

Medical bills on credit

This is true, many medical billing companies nowadays let your credit company know about this. I was charged with a medical billing from CMRE, but instead of holding it off for a while, they notified me right away and I was able to pay it off with having it affect my credit score.

Medical bills on credit

I just got FUCKED. I saved 20,000 in my life, paid off a whole truck, always have been on time, and a medical bill for $200 I didn#39;t know I had was sent to collections and I never got a phone call and it dropped me from Excellent to Poor and now I have a dream of owning a home and it raised my interest and PMI rate. FUCK THE SYSTEM. $200 oversight costs me THOUSANDS in increased interest.

Medical bills on credit

Great info thank you!

Medical bills on credit

Why is this bug eyed guy giggling so much?

Medical bills on credit

I called I said i wanna settle and they told me no

Medical bills on credit

some say send letter to credit bureaus and some say send letter to collection agencies. .what is what.. I#39;m lost

Medical bills on credit

What if i already made my first payment? they supposed to sent me a letter via mail with all the info and details but soon is about to be a month never received anything :/ they gonna call me anytime this week for the second payment :/ what to do what to do .

Medical bills on credit

Clarification PLEASE.. Do I send letters to the Credit Burreau#39;s?? such as: TRANSUNION, EQUIFAX, EXPERIAN. -OR- the annoying credit agencies that bought out my debt??

Medical bills on credit

What if i already have begin making payments on an old debt, but then learn they do not have proof I owe this? They said once i begin making payments, my dispute is not valid..

Medical bills on credit

Medical bills can be tricky. There is a new law that says if you pay medical bills in full instead of settling, they will not put satisfed on your credit report and you can dispute it after. I wonder has anyone tried it.

Medical bills on credit

If Debt forgiven. Does it stop being reported thus boost my credit score?


How Medical Bills Impact Your Credit Score

Written By : MBAA

Medical bills on creditMedical bills have the potential to wreak absolute havoc on a person’s credit. Large amounts of debt, medical or otherwise, have a long history of demolishing credit scores and taking away financial freedom.

Given the often unexpected and sudden way in which medical bills can hit credit reports, this type of debt can be especially damaging. Unlike credit cards and other debt, medical bills are not built up slowly and there is no spending limit, so the potential for large-scale damage is much greater.

According to Anthony Sprauve, a MyFico.com spokesman, accounts in collections can lower an individual’s FICO score by up to 100 points. If you have ever tried raising your credit score, you can attest to how hard it is to raise it by as few as 10 points. Imagine trying to recover from a 100-point hit.

Those with the highest credit scores definitely have the most to lose as far as credit worthiness, and they are the ones who usually see the largest dings as a result of collections.

Even after the bill is paid in full, the item remains on a credit report for seven years. Although the impact of the collection on your credit score will diminish as the collection gets older and will eventually “fall off,” medical bills can cause quite a stir in your finances by limiting your credit opportunities. As a result, you might only qualify for high-interest, high-fee loans and credit cards.

Medical bills are the number one reason for filing bankruptcy in the U.S. Adding insult to injury, bankruptcy can stay on a credit report for up to a decade, three years longer than a negative credit rating due to a debt collection.

Medical bills on creditA lender will determine how much to lend you based on your credit score. Varying opinions exist on the ideal percentage of credit utilization. However, let’s assume that the ideal goal for percentage of available credit is 30 percent or less.

According to this figure, you should not have a balance of more than $3,000 if you have a $10,000 limit on a credit card. If you have the aforementioned $10,000 of available credit, but a $15,000 medical bill gets reported to your credit report, you will be in debt $5,000 more than you have been officially allotted.

This is a red flag alerting lenders that you live beyond your means. This may not sound fair since your high debt is not due to frivolous spending, but sadly, it is the truth in many situations.

Some lenders do their own calculations, removing medical debt from the equation because they believe that medical debt is usually incurred out of necessity rather than poor spending habits. Therefore, these lenders might be more willing to take the risk of lending money as long as the credit report is otherwise healthy.

Because some lenders have chosen to be flexible about the presence of medical collections on a credit report, and there hasn’t been much backlash or a notable number of companies reporting remorse for extending credit to these individuals, it raises the question of why any credit scoring model would take medical bills into consideration.

Of course, there are people who could pay their medical bills and don’t, but can a score damaged from a one-time incident involving one’s health be a true indicator of whether or not a person is financially responsible?

Unfortunately, about 80 percent of all medical bills have some type of error on them, whether from double billing, abuse, inflated charges, or billing for services that were not received. Improper reimbursement from a patient’s health insurance company accounts for a large amount of billing errors. These instances only drive up the cost of your bill, further impacting your score via collections and credit utilization ratio.

One good thing is that, with the latest system of FICO credit scoring, collections under $100 will no longer be considered when calculating a credit score. This will eliminate the negative impact of nearly one third of medical debt from affecting FICO scores. The other two thirds, however, will still make their negative marks.

The new Vantage Score system is a potential method of relief for consumers who are making payments on a medical bill. Created by the three major credit bureaus, TransUnion, Equifax and Experian, VantageScore offers a unique algorithm that better represents today’s consumers, offering numerous updates to the old systems of credit calculation.

Medical bills on credit

Under the newest version of this system, called VantageScore 3.0, medical debt cannot contribute to a credit score unless that debt has been given to an outside collection agency.

If passed, a new law will soon assist in lifting some of the burden. Under this proposed regulation, collection agencies cannot report negative scores to the credit bureaus for six months if the consumer is disputing or negotiating the bill.

This is a great solution for anyone who feels their bill is inaccurate, believes the insurance company paid less than they should have or who might qualify for any type of financial assistance. After all, the system of calculating a credit score neither knows nor cares whether or not a charge is valid and what the consumer is planning to do about it.

This law would keep the consumer’s credit report clear of this debt until a reasonable amount of time has been given to the consumer to fix any errors.

There are steps you can take to minimize the chances of having a medical bill negatively affect your credit score. Because of the large number of medical billing discrepancies, be sure to keep detailed records on all services, procedures and supplies you received as well as the names of doctors who treated you.

This will give you a jump-start on double-checking each charge’s validity. Often, medical bills do not arrive right away, and without accurate records, it may be difficult to discern valid from invalid charges.

If you receive a bill with charges for medications, services or procedures that you don’t remember, you can easily pull out your records and compare them with the bill. Place a check mark on any charge that does not seem correct.

Call the billing department immediately and question the validity of the charges in question. Keep asking for help from the billing department until you fully understand and agree with the charges.

The sooner these potential inconsistencies are taken care of, the better, since your prompt response will alert them that you have kept meticulous records and refuse to be overcharged.

Furthermore, they are already well aware of the high number of inaccuracies that occur in medical bills and may be more likely to work with you before the debt is sent to collections.

Communicate With Debt Collectors

Stay in constant contact with the billing department. A debt collection agency could begin reporting negatively to the credit bureau between one and six months after the first billing date.

If there are any questions or perceived discrepancies, stay in communication with them. This tells them that you are diligent and are working on it. If they know that you are not avoiding them but simply questioning the validity of some of the charges or having a hard time coming up with the funds, it might help prevent a negative report to the credit bureau.

It is much easier and often more cost effective to prevent a problem before it starts. It is clearly easier to keep bad marks off of your credit report than it is to remove them once they have been reported.

Whether medical bills should show on a credit report has been a subject of debate for quite some time. Many consumer advocates believe that unpaid medical bills are not a reliable indicator of a person’s credit worthiness but simply a sign that he or she had an expensive medical issue at some point within the past seven years.


Do medical bills affect credit?

Medical bills on credit

Although your doctor’s office is not directly linked to the three major credit bureaus, namely, Equifax, Experia, and Transunion, you may be wondering if medical bills affect credit.

Do medical bills affect credit

On of the most asked questions for patients is whether or not your medical bills can affect future credit scores and therefore your ability to access loans, credit cards and other credit when you may need it. To answer this question, we need to review firstly how unpaid medical bills can have an affect on you as a patient and how generally the system of paying medical bills works.

Your payment information is not regularly reported to any credit bureaus. In fact, it is only reported when there is a case of an unpaid bill in which you have received final notice for.

If you are not proactive in paying your medical bills, are unable to cover the medical expenses that you are billed or are deliberately avoiding your doctor and hospital billing department, your doctor will turn your debt over to a collection agency.

This is where medical bills can have a direct impact on your credit as it will appear in your credit report. Having a bill in collections will affect your credit score. Collection agencies can take up to as long as seven years to drop off the unpaid medical bill; therefore, your credit report will remain affected for years.

Even if you pay a bill that is in collections, you may not be able to get it removed from the credit report. In future though, you may pay your bills on time and keep your credit card balances low to help your credit score bounce back.

Removing your medical bills from your credit report

More often then not, there are mistakes that are made when paying your medical bills. Even if you paid your medical bills on time, it may still be on record that you have not paid them. If you or insurer paid a bill, which went into collections, there are ways by which you can get it removed from your credit report. Below are the steps in order to remove your paid medical bills from your credit report.

Step 1. Document proof in support of your payment

You may collect payment records from your doctor, look up old credit card statements, or find copies of canceled checks and include them in your dispute letter. You should provide enough documentation that clearly shows that you paid your medical bills on time. This could be with an invoice with a specific billing due date followed by bank records of the transaction made to pay the medical bill. Be sure to include an receipts that confirms proof of payment in case you#8217;ve paid in cash or made ATM withdrawals to cover the cost.

2. Send a letter to the bureau that reports your credit falsely

Send in a letter to the bureau, which reports your credit. You may have to check the credit reports of all the three bureaus to identify which one states your credit history incorrectly. In the letter, you need to mention that you are disputing the collections and include documentation in support of your paid bill.

3. Keep an eye on the Fair Credit Reporting Act

The Fair Credit Reporting Act needs you to keep in touch with the credit bureaus while the issue gets resolved. You need to keep a track on the status of your claim and offer additional documentation if the need arises.

Prevention to stop medical bills affecting your credit

One of the best ways to ensure that medical bills do not affect your credit is to prevent unpaid medical bills in the first place. Thinking of ways in which you can prevent medical bills affecting your medical bills in future, you may consider the following:

One of the key ways to reduce the risk of poor credit ratings due to unpaid medical bills is to plan ahead of time. This means creating an outline with your income, costs and deadlines for your medical bills to ensure that you pay by the deadline. If it helps, you can consider paying bills as early as you can so that the chances that you forget to pay them are reduced.

2. Understand your health insurance policy

Many times, health insurance policies can be tricky to understand. However the benefit of understanding your policy inside and out can mean huge reduction in stress. Know your policy in and out. Follow up with the insurer by phone or email if the payment has been made on a bill they have agreed to cover.

3. Online fundraising to cover unpaid medical bills

Online fundraising or crowdfunding for unpaid medical bills can be a great option in order to prevent unpaid medical bills. If you are unable to pay your medical bills, you can consider online fundraising to seek help from your family, friends, and colleagues.

Online fundraising seeks helps directly from your own network to cover the cost of treatment and medical care. By doing so, it can avoid you from having unpaid medical bills in the first place and therefore have no risk of low credit scores.

Opening up the lines of communication can work for you in resolving unpaid medical bills. This is particularly helpful to prevent your doctor from working with the debt collections office. You may talk to your doctor and ask him/her and negotiate your medical bill. If you get lucky, it is a good idea to have a written note from your physician; you can use it in your favor when a dispute arises.

5. Seeking professional assistance

If you are overwhelmed by your bill, you can consider hiring a medical billing advocate. He/she will negotiate the bills for you. Although it may cost you a few hundred dollars, you may end up saving a lot more in the future.

Professional assistance can also ease the stress which can weigh heavily on you and your family. It can also provide better means of seeking further assistance with your medical bills but also ensure that your credit rating is not poor as a result.